Insurance Exam
What is the maximum amount of time a health plan can exclude a preexisting condition?
12 month.
Under which condition would an employee's group medical benefits be exempt from income taxes?
An employee's group medical benefits are generally exempt from taxation as income.
Who must sign the Notice Regarding Replacement?
Both the applicant and the agent.
What is the goal of the HMO?
Early detection through regular checkup.
Bethany studies in England for a semester. While she is there, she is involved in a train accident that leaves her disabled. If Bethany owns a general disability policy, what will be the extent of benefits that she receives?
None.
When is death benefit paid on joint life?
The first death only.
Can the policy holder convert from whole to term, or vice versa?
Yes.
An insured's long-term care policy is scheduled to pay a fixed amount of coverage of $120 per day. The long-term care facility only charged a $100 per day. How much will the insurance company pay?
$120.00 a day.
An insured has a major medical policy with a $500 deductible and 80/20 coinsurance. The insured is hospitalized and sustains a $2,500 bill. What is the maximum amount that the insured will have to pay?
$900.00
If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured's death?
0%
Which of the following would be a typical maximum benefit offered by major medical plans?
1 Million Dollars.
When a consumer is moving from one health plan to another, and the new health plan requires a 12-month exclusionary period for pre-existing conditions, how much credit does the consumer get for his or her previous coverage?
1 month for every month of continuous coverage.
Under HIPAA, how many months of creditable coverage must a new employee have earned to not have a pre-existing condition exclusion in the new plan?
12 months.
An insured was involved in an accident and could not perform her current job for 3 years. If the insured could reasonably perform another job utilizing similar skills after 1 month, for how long would she be receiving benefits under an "own occupation" disability plan?
2 years.
How long is the period that it takes for benefits of a life insurance policy to accrue after a receipt of a acceptable proof of loss due to death by the insurer?
20 days.
Common versions limited pay life.
20 pay life, and life paid up at age 65.
Following an injury, Jill, age 66 and covered under Medicare Parts A & B, was treated by her physician on an out-patient basis. How much of her doctor's bill will Jill be required to pay out-of-pocket?
20% of covered charges above the deductible.
One of the differences between group underwriting and individual underwriting is that there is little or no medical information required regarding plan participants in groups of
50 or more.
What is the maximum period for backdating?
6 months.
How long is the insurer given to settle death claims after the receipt of the proof of death?
60 days.
At what age may an individual make withdrawals from an HSA for nonhealth purposes without being penalized?
65.
Which of the following statements is not true of a Combination Dental Plan?
A combination plan is also known as the "Superimposed Plan".
Riders attached to a life insurance policy that allows death benefits to be used to cover nursing or convalescent home expenses.
Accelerated Benefits
Deferred annuity
An annuity that either is purchased with a single lump sum or is purchased through periodic payments. The owner will receive current interest rate or guaranteed interest rate, whichever is higher.
Purest form of term insurance allowing death benefits remain level without proof of insurability but with premiums increasing annually.
Annually renewable term
In an annuity, the accumulated money is converted into a stream of income during which time period?
Annuitization Period.
When must an insurance company present an outline of coverage to a person?
At the time of the application.
Occasional visits by which of the following medical professionals will NOT be covered under LTC's home health care?
Attending physician
In a group prescription drug plan, the insured typically pays what amount of the drug cost?
Copayment.
Leo is receiving hospice care. His insurer will pay for painkillers but not for an operation to reduce the size of a tumor. What term best fits this arrangement?
Cost Containment.
A long stretch of national economic hardship causes a 7% rate of inflation. Devonne notices that the face value of her life insurance policy has been raised 7% as a result. What is the name of the provision that caused this change?
Cost of Living Rider.
What characteristics make whole life permanent protection?
Coverage until death or age 100.
When must an IRA be completely distributed when a beneficiary is not named?
December 31 of the year that contains the fifth anniversary of the owner's death.
The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the___________.
Entire Contract Clause.
Which of the following is NOT a way to determine the interest rate in a Universal Life Policy?
Estimate market conditions for the life of the policy.
Continuing education requirements must be met_______.
Every two years.
A contract that has yet not been fulfilled by one or both parties that promises action in the specified event of a future occurrence.
Executory Contract
A salary reduction cafeteria plan that uses employee funds to provide various types of health benefits.
Flexible Spending Account
If Tom's policy allows him to make periodic additions to the face amount at standard rates, without proving insurability, his policy includes a__________.
Guaranteed Insurability Option
Will's health insurance includes a Narcotics & Intoxicants provision. Will has been drinking alcohol before leaving his house and driving his car into an embankment. After the police arrive on the scene, they determine that Will has been drinking. Will his policy pay for his injuries?
He will receive no benefits.
An optional disability income rider that waives the elimination period when an insured is hospitalized as an inpatient.
Hospital Confinement Rider
What are the two components of a universal policy?
Insurance and Cash Account.
The Medical Information Bureau, which is supported by insurance companies, was designed to protect_________.
Insurance companies from adverse selection by high risk persons.
A rider that is added to a life insurance policy to pay long term care benefits.
Integrated LTC Rider
Whole life policies that have a premium rate that may vary year to year.
Intermediate Premium.
How is the amount of Social Security disability benefits calculated?
It is based upon the worker's Primary Insurance Amount (PIA), which is calculated from their Average Indexed Monthly Earnings over their highest 35 years.
Characteristics of a Whole Life Policy.
Level Premium, Death Benefit, Cash Value, and Living Benefits.
Provides a level death benefit and a level premium during the policy term.
Level Premium.
Three types of term coverage.
Level, increasing, and decreasing.
Designed so that the premiums for coverage will be completely paid up well before age 100.
Limited Payment whole life.
Which type of care is NOT covered by Medicare?
Long Term Care.
A type of health insurance that usually carries a large deductible and pays covered expenses up to a high limit whether the insured is in or out of the hospital.
Major Medical Insurance
The date when the face amount of life insurance becomes payable.
Maturity date
An insured does not have to pay coinsurance or deductibles on a full-series mouth x-ray, but does have to pay a deductible to get his cavities filled. Which dental plan does he have?
Non Scheduled.
Fred and Jody are covered under a group health insurance plan at his place of employment. When Jody gave birth to their first child, what must he do in order to have coverage for their child?
Notify the insurer within 31 days in order for coverage to continue without any evidence of insurability.
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced.
A policy in which all premiums have been paid up but has which not matured either to death or endowment.
Paid up insurance
A rule that states that a contract may not be altered without written consent of both parties; in other words, the contract may not be altered by oral agreement.
Parol evidence rule
Which of the following is deemed to be consideration on the part of the applicant, in respect to the Consideration Clause?
Payment of Premium.
Evenly distributing benefits among the living named beneficiaries.
Per Capita.
Distributing benefits of a beneficiary who died before the insured beneficiary's heirs.
Per Stirpes
Term used to describe various forms of insurance policies that build cash and remain in effect for the entire life of the insured.
Permanent.
Nonforeiture value in which an insurer loans a part or all of the cash value of the policy assigned as security for the loan to the policy owner.
Policy loan
Which of the following will be included in a policy summary?
Premium amounts and surrender values
Which of the following is correct concerning the taxation of a Key Person Life Insurance Policy premiums and death benefit?
Premiums are not deductible as a business expense and the death benefit is not taxable to the company.
Termination of an insurance policy, with an adjustment of the premium in proportion to the exact coverage that has been in force.
Pro Rata Cancellation
A Medicare SELECT policy does all of the following EXCEPT
Prohibit payment for regularly covered services if provided by non-network providers.
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required.
What would a physician utilize if he/she wanted to know if a treatment is covered under an insured's plan and at what rate it will be paid?
Prospective Review
Single Premium Immediate Annuity
Purchased with a single lump sum payment that start within 1 year from the date of purchase.
Another name for term insurance.
Pure Death Protection
If a policy contains an option where the insured has the ability with the renewable option to answer questions to prove insurability and get a possible premium rate, this could be what?
Re-entry option
A form of insurance whereby one insurance company agrees to indemnify another insurance company for part or all of its liabilities from insurance policies it has been issued.
Reinsurance
The termination of an insurance policy either to the misrepresentation by the insured, or by fraud, misrepresentation, or duress on part of the agent/insurer.
Rescision
The amount representing actual or potential liabilities kept by an insurer in a separate account to cover debts to a policy holder.
Reserve
Bonnie wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. Bonnie should have her husband named as the______.
Revocable beneficiary.
Cancelling the policy with a less than proportionate return of premium.
Short rate cancellation
Designed to provides a level death benefit to the insured's age 100 for one time lump sum.
Single Premium Whole Life
Which type of life insurance policy generates immediate cash value?
Single Premium.
What is a basic whole life policy that the insured pays the premium from the time of the policy issued until the insured's death at age 100.
Straight Life.
Provides temporary protection because it only provides coverage for a specific period of time is ________.
Term insurance
A term policy with the level premium and level death benefits that provides coverage until the insured's 65th birthday.
Term to 65.
Anna loses her left arm in an accident that is covered by her Accidental Death and Dismemberment policy. What kind of benefit will Anna most likely receive from this policy?
The Capital Amount in a lump sum.
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
The cost of coverage is a deductible expense by the employer.
An insurance advertisement exaggerates the benefits of an insurance policy, due to human error at the insurer's advertising agency. Who will the Commissioner hold responsible for the exaggeration?
The insurer.
All of the following are true of Key Person insurance EXCEPT
The plan is funded by permanent insurance only.
Which of the following statements is true concerning the Accidental Death Rider?
The policy may pay a benefit of 2 or 3 times the face amount.
An individual purchased a Medicare supplement policy in March, and decided to replace it 2 months later. His history of coronary artery disease is considered a pre-existing condition. Which of the following is true?
The pre-existing condition waiting period fulfilled in the old policy will be transferred to the new policy, the new one picking up where the old one left off.
A temporary license may be issued without examination to all of the following, EXCEPT
The spouse of a retired producer.
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity?
The surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges.
Which of the following is true regarding METs?
They allow several small employers purchase less expensive insurance together.
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities.
Which provision states that the insurance company must pay Medical Expense claims immediately?
Time Payment of Claims.
WHat is the NAIC established to do?
To protect and educate consumers by establishing advertising and disclosure model regulations for insurers.
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when its to the insured's disadvantage.
Twisting
Under which of the following types of receipts will the coverage begin immediately even if the applicant is later found uninsurable?
Unconditional.
The portion of premium for which policy protection has not yet been given.
Unearned Premium
Policy that allows the policy owner the flexibility to increase the amount of premium going paid in and then later decrease it again.
Universal Life.
How long will the beneficiary receive payments under the single life settlement option?
Until the death of the beneficiary.
How long does an employee usually have to exercise the conversion option?
Usually 31 days from the group.
A disability rider found in Universal Life, that waives the cost of the insurance, but does not waive the cost of premiums necessary to accumulate cash values.
Waiver of Cost
Continuation of life insurance coverage if the insured becomes totally disabled and is unable to pay premiums.
Waiver of premium
An agent is completing an application for a long-term care policy. The agent is required to do all of the following EXCEPT
Warn the applicant about the 10-day free-look period.
They are expensive to administer.
What is the major problem with naming a trust as the beneficiary of a life insurance policy?
When does the cash value of adjustable life policy develope ?
When the premiums paid are more than the cost of the policy.
Provides lifetime protection, and includes a savings element.
Whole life policy.
When do Whole Life Policies endow?
100.